Over-65s lack confidence in using bonds for IHT planning

There is a significant awareness gap around how investment bonds can be used as part of inheritance tax (IHT) planning among people aged over 65 in the UK, according to LV=.

Its Wealth and Wellbeing analysis showed that just 3 per cent of over-65s said they had a strong understanding of how bonds can be used for IHT planning.

LV= noted that, despite the growing pressure on estates, wider awareness remained low.

More than two thirds (67 per cent) of adults in the UK said they knew little or nothing about the role investment bonds can play in IHT planning.

Over a fifth (22 per cent) had never encountered them in the context of inheritance planning at all.

Awareness varied across demographics, with 27 per cent of women saying they were unfamiliar with bonds as an IHT planning solution.

LV= said the findings come as inheritance planning is becoming more complex and relevant for a rising number of clients, with frozen thresholds, asset growth, and planned policy reforms prompting advisers to reassess traditional approaches.

“Our research highlights a significant awareness gap around investment bonds at a time when inheritance planning is becoming more complex, particularly for those nearing or in retirement,” commented LV= savings and retirement sales director, Gwen Haggo.

“As the tax landscape evolves, it’s important that advisers understand the technical role bonds can play within structures such as loan trusts, where future growth can fall outside the client’s estate for IHT purposes, alongside the ability to access tax-deferred withdrawals – offering a valuable combination of tax efficiency and planning flexibility.”

---